Reports indicate that YouTube will begin offering ad-supported feature films as early as next month. As of now, one of the big Hollywood studios is already on board, and one can only assume that feature films on YouTube means that iPhone users will also be able to download and watch as well. There are, however, quite a few hurdles in YouTube’s way.

CNET reports:

To be sure, not all the studios are prepared to give YouTube full-length movies. Canadian film company Lionsgate agreed in July to give YouTube access to only short movie clips. At least one other studio is trying to cut a similar deal for short-form content with Google, said a separate high-level industry insider.

There’s skepticism in some circles about whether enough ads can be placed into a streaming movie to make it profitable without also overloading viewers with commercials. Another sticking point is Google’s insistence on using a specific ad format, such as prerolls or postrolls, for feature films, according to two studio sources. They declined to say which ad unit Google prefers but said some of the studios want the final say on how to advertise to viewers.